The effectiveness of Electronic Tax Registers in Processing of Value added Tax Returns(Perspectives from Registered VAT Tax payers in Kisii town, Kenya

Abstract

This study aimed to assess the effectiveness of Ele ctronic Tax Registers (ETRs) in the processing of V alue Added Tax returns. The study sought to determine the exte nt to which the Electronic Tax Registers are being used by the taxpayers, the problems if any that they were e ncountering in using them as well as get possible s olutions to the problems. Since many researchers had concentrat ed much of their work on tax systems, tax evasion, taxes and interest rates, a lot was desired especially in this area to assess the effectiveness of Electroni c Tax Registers had been recently introduced by the Kenyan tax auth ority. The study sought to establish if the Electro nic Tax Registers had increased the speed at which taxpayer s processed their VAT returns and if there were any associated costs in the processing of VAT. The popu lation under study comprised of 98 VAT registered taxpayers in Kisii town according to the regional K RA office’s records which was stratified into; serv ice providers, wholesalers & large scale retailers and supermarkets. The main instrument of collecting pri mary data was the questionnaires while secondary data wa s obtained from the KRA regional office. Analysis o f data was mainly done using descriptive statistics. The f indings of this research project will assist the Ke nya Revenue Authority look for ways of improving the processing of VAT returns. Due to limited sources of literatu re, this research was not considered as exhaustive but could form the basis for further investigation.Data was collected from 78 registered VAT taxpayers in Kisii town. The respondents were senior, middle level and low mana gers. Out of the 78 registered VAT taxpayers to whom the questionnaires were administered, only 68 responded . This gives a response rate of 87% percent. Data analysis tools used in the research were Excel and SPSS and data was presented in form of tables and graphs.Based on the results from data analysis and findings of the research, one can safely conclude the following; First, Kenya has witnessed significant changes in many aspects of its economy over the last four decades, but like most d eveloping countries, it has had to contend with the common problems that plague tax systems of developing coun tries (Karingi, Wanjala, Dec, 2005). Secondly, the timely filling of the monthly VAT returns is attributed to many factors. ETR is one of the factors. Further t he introduction of ETR has assisted in cutting costs t hat the business used to incur in processing VAT. T hirdly, It was found that ETRs have enhanced the revenue colle ction resulting from sound sales and stock audits. Fourthly, to evaluate the effectiveness of ETRs in filling VAT Returns at regular intervals, it was fo und that the use of ETRs was not a waste of funds and has assist ed the business in many ways. They also don’t ETRs break down too often. Lastly, KRA has articulated a visio n for Kenyan customs, and in the process of deliver ing such mandate, it has faced challenges while meeting its pillars that include The following challenges need to be addressed within the KRA: the cost and classificati on of the businesses which need to use ETRs.: ETRs are expensive, cost to be paid in instalments; ETRs sho uld be compatible with computers in business premis es